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JAMES Ashby will press ahead with his sexual harassment claim against Speaker Peter Slipper after settling his dispute with the federal government, which has so far spent more than $700,000 fighting the case.

With the case set to return to the Federal Court in Sydney next week, it was announced yesterday that a settlement between Mr Ashby and the Commonwealth had been reached for $50,000, with a added commitment to providing "an improved education program" for MPs and staff about sexual harassment.

The government has also withdrawn its abuse of process case against Mr Ashby.

The settlement came just months after both Attorney-General Nicola Roxon and Leader of the House Anthony Albanese, who compared the case to Watergate, each made public claims including that Mr Ashby's case was an abuse of process, that he had breached his employment provisions and had acted politically to harm Mr Slipper.

Ms Roxon said the Commonwealth had been thinking of the taxpayer when it settled for an amount above what was a reasonable calculation of Mr Ashby's losses.

Last month, the Federal Court agreed to allow Mr Slipper to remove the word "unlawful" from documents it had filed about Mr Ashby providing diary extracts to his boss's political rival Mal Brough and Daily Telegraph journalist Steve Lewis, as Judge Stephen Rares was told considerable "time, trouble and expense" would be saved.

Despite the Commonwealth settling, Ms Roxon said Mr Ashby should drop his case against Mr Slipper, which could pave the way for him to return to his Speaker's chair in parliament.

She added "settlements aren't about who is right or wrong, they are about bringing matters to a speedy conclusion."

"We don't resile from arguments that we've previously made before the court that the claim was vexatious. However, as Mr Ashby has now withdrawn his claim, our abuse of process claim will be withdrawn as well. Given the reasons the case was brought forward, it was a lawyers' picnic that could have extended well into next year."